Kospi Surges 16.5% as Microsoft’s AI Profits Ease Bubble Fears

Relentless Rally Erases Weeks of AI Worries

South Korea’s Kospi index rocketed 16.5% on Friday, clawing back almost all the losses of the previous three sessions as traders piled back into artificial intelligence-linked stocks. The sudden reversal was triggered by Microsoft’s stronger-than-expected quarterly profit, which halted a brutal sell-off that had slashed the Kospi by over 17% amid growing fears of an AI bubble and intensifying competition from Chinese chipmakers.

The rally was led by Samsung Electronics, which surged 24.8%, and memory chipmaker SK Hynix, which soared 27.8%. Both companies are deeply tied to the global AI supply chain, and their shares had been hammered in the prior days. The rebound rippled across the region: Japan’s Nikkei 225 jumped 5.5% to 65,282.21, with SoftBank Group—an investor in OpenAI—leaping 15% and chip equipment maker Tokyo Electron up nearly 11%. U.S. futures edged higher and oil prices advanced, adding to the broad risk-on mood.

The moves followed Microsoft’s report after the U.S. close on Thursday, which sent its shares up 15.5% in their best session in almost 18 years. The results were taken as concrete evidence that the enormous capital pouring into AI is finally generating returns, calming some of the deepest doubts that had sent tech stocks tumbling earlier in the week.

Microsoft’s Profit Beat Reverses the AI Sell-Off

Microsoft’s Earnings as a Catalyst

The magnitude of the Kospi’s bounce underscores how binary market sentiment around AI has become. After three days of indiscriminate selling, traders saw Microsoft’s profit beat as a signal that at least one hyperscaler could monetize AI investments. That rekindled demand for the entire AI hardware ecosystem, from memory chips to fabrication equipment. Stephen Innes of SPI Asset Management captured the mood: “The market went from throwing AI stocks overboard to fighting for the remaining seats before most traders had finished writing the obituary.”

Implications for Samsung and SK Hynix

Samsung and SK Hynix are bellwethers of the AI supply chain, as their advanced memory chips are essential for training and running large models. The steep single-day gains suggest that, for now, the market is betting that AI-driven demand for their products will remain robust even if Chinese rivals make inroads. However, both stocks remain well below their June peaks—the Kospi was over 9,000 then—indicating that a full recovery still depends on a steady stream of bullish earnings from major AI users.

Yen Intervention and the BoJ Waiting Game

Separately, the dollar fell sharply against the yen overnight, with the Nikkei newspaper reporting coordinated intervention that included a “rate check” by the Federal Reserve Bank of New York. The move briefly pushed the dollar below 160 yen, but it bounced back to 160.59 in early Friday trading, underscoring how persistent the yen’s weakness has been. With the Bank of Japan expected to hold rates steady at its policy meeting later Friday, the suspected intervention appears timed to head off speculative moves. Analysts at Capital Economics forecast that the yen will remain around 160 this year, limiting the impact on Japanese exporters’ competitiveness for now.

Oil’s War Premium Persists

Oil prices ticked higher amid ongoing tensions between the U.S. and Iran, with the Strait of Hormuz—a critical waterway for crude—remaining largely closed. Brent crude rose 0.3% to $87.14 per barrel, roughly $15 above its level just before the Iran conflict erupted in late February. The disruption introduces a cost variable that could eventually feed into global inflation and central bank policies, though for the moment equity markets are focused squarely on the AI earnings narrative.

What the Kospi Surge Means for Market Participants

For investors and businesses tracking the AI supply chain, the speed of the Kospi’s reversal forces attention on a handful of concrete developments ahead:

• Upcoming quarterly reports from other AI hardware suppliers, such as ASML and TSMC, will test whether Microsoft’s results are an outlier. If those companies also show that AI-related demand is converting to earnings, the tech rebound could hold; otherwise, last week’s fragility may quickly resurface.
• The Bank of Japan’s decision and any follow-up currency intervention will set the near-term path for the yen and Japanese export stocks. A hold on rates leaves the yen vulnerable despite suspected official buying, keeping import costs elevated and potentially squeezing corporate margins.
• Brent crude’s persistence near $87 per barrel shows that the Strait of Hormuz closure is excluding supply. Any news of de-escalation between the U.S. and Iran could unwind that geopolitical risk premium, while further blockage would push energy costs higher, complicating the macroeconomic backdrop for equities.